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Western Price Survey

March 9, 2018Springing Forward, Looking Ahead

With spring approaching, energy traders begin anticipating the end to natural gas withdrawals and a steady increase in hydro and solar production as well as power demand.

U.S. Energy Information Administration analysts estimate working natural gas stocks should total 1,402 Bcf by March 31—the traditional end to the withdrawal season—which is 18 percent less than the five-year average. This forecast is predicated on reductions keeping pace with the five-year average.

Natural gas prices should moderate in the coming months, the agency noted in its March 6 Short-Term Energy Outlook, based on expectations that natural gas production will reach record levels this year.

The EIA expects natural gas production to rise 8.1 Bcf/day, to a record 81.7 Bcf/d on average, in 2018. Henry Hub spot prices should average $2.72/MMBtu in March and $2.99/MMBtu for the year.

The EIA expects the share of U.S. electricity generation from gas-fired power plants to increase from 32 percent to 34 percent in both 2018 and 2019.

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Working natural gas in storage at the national level was 1,625 Bcf as of March 2, according to EIA estimates. This is a net decrease of 57 Bcf compared to the previous week.

Storage levels are now 29.5 percent less than a year ago and 15.6 percent less than the five-year average.

Western natural gas prices varied in the March 1 to March 8 trading period. Southern California CityGate gained the most, up 11 cents to $2.81/MMBtu. Most Western hubs shed value in trading; El Paso Permian posted the greatest loss, down 27 cents to $1.83/MMBtu.

Peak power values in the West dropped between 50 cents and as much as $6.70 in trading. North of Path 15 lost the most, down $6.70 to $32/MWh.

Off-peak power values varied. While Mid-Columbia added $1.65 to $19.30/MWh, Palo Verde values fell $4.25 to $24.50/MWh on average by March 8.

Demand on the California Independent System Operator grid reached 28,134 MW March 5, which was the week's high. Northwest Power Pool demand was 60,050 MW March 6.

Heavy snowfall since March 1 boosted the California snowpack snow-water equivalent by a few inches, but even with the increase, it is still just 38 percent of the March 8 average, according to the California Department of Water Resources' weekly bulletin. The state's overall snowpack is now at 19 percent of average, based largely on dry conditions in December.
–Linda Dailey Paulson.

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